As the Globe notes in it's coverage of the Madoff probe, the timing on this couldn't be worse as "the Madoff scandal has further weakened already-battered investor confidence in securities markets and has raised more troubling questions about the effectiveness of the regulatory system."
Sometimes the parallels between now and events of the late 1920s are a little spooky. For instance, John Kenneth Galbraith in The Great Crash tells the tale of Clarence Hatry whose fall from grace is one of the events that, along with the collapse of the stock indexes, pricked the investment bubble:
In England on September 20, 1929, the enterprises of Clarence Hatry suddenly collapsed. Hatry was one of those curiously un-English figures with whom the English periodically find themselves unable to cope. Although his earlier financial history had been anything but reassuring, Hatry had built up an industrial and financial empire in the nineteen-twenties of truly impressive proportions. The nucleus, all the more remarkably, was a line of coin-in-the-slot vending and automatic photographic machines. From these unprepossessing enterprises he had marched on into investment trusts and high finance. His expansion owed much to the issuance of unauthorized stock, the increase of assets by the forging of stock certificates and other equally informal financing. In the lore of 1929, the unmasking of Hatry in London is supposed to have struck a sharp blow to confidence in New York.
It's funny that not only are these two frauds linked in the ill-timedness of their unmaskings, but also in the humbleness of their origins: Hatry started out in vending machines, Madoff's initial investment stake was earned working as a lifeguard and sprinkler installer.
It's also funny that while Hatry was notorious in his day, he doesn't even warrant a wikipedia entry of his own now. I wonder if we'll find a way to conveniently forget Madoff in time for the next big speculative mania?